Adani Power Cuts Electricity to Bangladesh Over $846M Unpaid Bills, Causing Major Power Shortfall - Read Now

Adani Power has halved electricity supply to Bangladesh, citing unpaid bills of $846 million, resulting in a 1,600 MW power shortfall. Bangladesh’s payment delays and pricing changes contribute to the growing crisis.

By Aayushi Dubey Nov 2, 2024, 10:19 IST

The Adani Power Jharkhand Limited, a subsidiary of Adani Power, has severely cut off electricity supply to Bangladesh since it has to face unpaid dues of as much as USD 846 million, The Daily Star reports. Bangladesh is facing acute power shortages following the reduction in power supply by Adani Power Jharkhand Ltd, which created a shortfall of over 1,600 MW in the power supply last night.

Data from Power Grid Bangladesh PLC revealed that the Adani plant, which started supplying 1,496 MW, is now providing only 700 MW through a single unit. The power cut has escalated the power crisis in Bangladesh directly affecting businesses, industries, and households dependent on regular electricity.

Unpaid Bills Lead to Cut in Power Supply

The decrease in the power supply is due to unpaid bills. On 27 October, Adani Power issued a letter to the Bangladesh Power Development Board (PDB), informing that it may be compelled to suspend the power supply if the outstanding dues are not cleared by October 30. After the expiry of the deadline, Adani Power implemented its action and decreased the power supply in accordance with the Power Purchase Agreement between the parties.

According to PDB, disputes over payments have arisen from the rising costs by the Adani company. Adani Power weekly charge rose as high as USD 22 million whereas PDB could only afford USD 18 million in every week with arrears mounting.
Krishi Bank could not credit due to dollar shortage further added woes.

Change of Rate Raises Tension for PDB

The current pricing row dates back to the time when Adani Power decided to revert to the original PPA pricing formula after a one-year supplementary agreement for lower coal prices ended. The original PPA calculates coal costs on indices from Indonesia and Australia, thereby making Bangladesh face higher energy cost inflations.

Under PPA conditions, Adani Power retains all the right to obtain capacity payments on supply suspension, and more financial pressures are created against Bangladesh Power Development Board. They can't take too much strain of full supply disruption, either.

Gautam Adani's Direct Message to Bangladesh Interim Government:

In a last-ditch attempt to clear up the mess, Gautam Adani, chairman of the Adani Group, wrote to Bangladesh's interim government, which is currently led by Nobel Laureate Professor Muhammad Yunus. He asked them to take immediate action toward the payment in order not to continue suffering through prolonged power disruptions.

The unpaid dues and the reduction in supply have created a tight spot for Bangladesh, as the country already faces a strained energy supply. The power crisis has underlined Bangladesh's need for a sustainable energy supply chain and reliable payment processes to support its growing demand.

This current crisis calls for stability in finances during cross-border agreements on energy and various risks of currency fluctuations and increases in costs of energy. With the negotiations yet to be completed between Adani Power and Bangladesh, this matter stands at the heart of making sure there is an uninterrupted power supply to millions of Bangladeshis.